Published on Liberal Democrat Voice By The Voice | Thu 18th December 2014 – 7:35 am

An independent report by Lord Myners published today has concluded Vince Cable and the Government made “the right decisions” during the process of selling off Royal Mail.

The BBC explains the background:

The probe was ordered by Mr Cable after a National Audit Office review into the privatisation of Royal Mail said too much emphasis was put on rushing the sale – the initial public offering (IPO) – at the expense of value for money. Shares in 60% of Royal Mail were sold in the flotation. A further 10% of stock was given to the company’s employees, while the government retained a 30% stake.

Royal Mail shares leapt on their first day of trading in October 2013 by 38%, rising later to a peak of 615p. They now stand at 394p. Lord Myners’ report says that a higher price could have been achieved but that “the consensus appears to be that this was the order of 20p-30p per share… equating to proceeds to government at IPO of £120-180m”. …

In his report, Lord Myners said the privatisation, which raised a total of £2bn, was handled “with considerable professionalism” and that the complicated sales process was partly to blame for the sale at a lower than optimum price.

He added: “The sale was done against a backdrop of global economic uncertainty and a threat of industrial action, which go a long way towards explaining the cautious approach taken throughout the process. We found no evidence to challenge the general assertion that an IPO price greater than 350-360p could have been achieved and we accept that a decision to revise the range would have come with added uncertainty and risk. The right decisions were made.”

Mr Cable said he was “grateful” for the report.

The 94-page report is available to read in full here. In his introduction to his report, Lord Myners states:

… I regard the privatisation to have been a complex exercise executed with considerable professionalism. The standard bookbuilding process does have inherent limitations. Some of these were evident in this transaction. It is possible that the Royal Mail issue might have priced a little higher had the bookbuilding process formally tested interest at levels above 330p per share, but I do not believe that this would have led to an IPO priced anywhere close to the level of initial trading

Vince Cable, the privatisation’s architect, may well have something to say abut the report today — but here’s a reminder of what he said a few months ago when he eviscerated Labour’s Chuka Umunna’s attempts to make political hay: Vince Cable in his own words on the sale of Royal Mail:

It was right that we took a cautious and measured approach to the sale. That approach was taken in the light of our primary objective, and reflects the considerable risks we faced due to industrial relations and challenging market conditions.

The price range for the shares was set following a comprehensive programme of engagement with over 500 potential investors and was benchmarked against valuations of comparable postal companies. I am clear that this was the correct approach to secure a successful transaction.

A more aggressive approach to pricing would have introduced significantly greater risk. The advice that we received in this respect was unambiguous. There was no confidence that a sufficient number of buyers would offer a significantly higher price. A failed transaction and the retention of Royal Mail in public ownership would have been a very poor outcome for the taxpayer, as the NAO report confirms.

Achieving taxpayer value is about securing both short-term and long-term benefits. In the short term, we have delivered a successful transaction, which raised £2 billion for the Exchequer, enabled over 690,000 members of the public to buy Royal Mail shares and put in place the largest employee share scheme of any privatisation in nearly 30 years. In the long term, we have reduced the ongoing risks to the taxpayer by putting Royal Mail in a position where it can operate commercially and finance its own funds if needed. In doing so, as the NAO confirms, we have achieved our key objectives.

The sale of shares in Royal Mail has delivered on our commitment to protect the universal postal service and safeguard vital services for the taxpayer.